What role do beliefs play in asset pricing

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Question - What role do beliefs play in asset pricing? How are beliefs updated in the neoclassical perspective in finance? How does behavioural finance extend/update the neoclassical model of belief updating in light of evidence about human behaviour from psychology? Discuss, with examples, how the behavioural extensions that you described explain empirical findings which appear as anomalies from the neoclassical perspective.

Reference no: EM133127215

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